Interview with Wesley Durkalski, Sendero Health Plans

State of Reform talked with Wesley Durkalski, the CEO of Sendero Health Plans, a non-profit health plan started by Central Health, the Travis County Healthcare District, to coordinate coverage for those with need in the local community. He tells us about the challenges Sendero faces and how the organization responds.

This interview has been edited for clarity and length.

State of Reform: What are the unique challenges Sendero faces as a non-profit carrier, and as a younger organization?

Wesley Durkalski: Sendero faces many of the challenges that the co-ops and other regional non-profit carriers battled.  We can roughly categorize some of the main challenges as operational, underwriting, and preserving mission which is the most important to us.

Underwriting may be our biggest challenge, as even industry-leading actuaries are still learning important characteristics of the Marketplace business, and so pricing strategies are constantly evolving significantly.  I am not an actuary, so I like to think of the Marketplace pricing as reflecting two simple trends. In the first years of the Marketplace, there was extensive ‘price discovery’ for overall morbidity of populations, with year-over-year increases reflecting the initial underpricing of the level of services that would be required to serve members. The second trend has been pricing adjustments to manage the ‘idiosyncrasies’ of the risk adjustment model.  The risk adjustment is key to ‘leveling the playing field’ and ensuring that sick members could be priced similarly to healthy members, and ensure that there were adequate funds for all.  Without this, we would be back in the days before guaranteed issue, with many sick populations left without affordable coverage.

As it turns out, the risk adjustment, while fairly effective in reimbursing risk for certain high-risk populations, still has some gaps for some sick populations.  What this has meant it that as a carrier, you have two options: one is to price very high to make sure you have enough funds to cover anyone who enrolls, or the second is to price competitively but make sure you have a limited network of providers, to lower the probability that greater numbers of the sick will sign up for your plan.  This is exactly what we have seen play out over the last few years, with carriers moving swiftly to either narrow networks or raise prices above market averages.

So in spite of the advancements in coverage offered by the Marketplace, Sendero’s mission is to increase coverage of all uninsured in the area and especially the sick. The mission has never been more important.  Sendero has always been committed to offering the broadest network of providers, to make sure members can get the care they need, and is proud to have been able to consistently offer the broadest network at the lowest price.

How do you determine actuarial risk in such an uncertain time politically?

The actuarial risk of the population alone has been challenging enough to determine, without even considering the extensive political risks.  As a small carrier, we can have only a limited impact on politics, so instead we try to focus on the trade-offs for our immediate community: pricing low to increase affordability increases underwriting and associated political risks, but increases affordability and coverage, which reduces the overall direct and indirect costs of the uninsured to the community.  As a community sponsored plan, Sendero is in a unique position to pursue this trade-off.

What are your hopes for the both Sendero and the individual market moving into 2019 and beyond?

Regardless of how both operational and political issues play out over the next years, the Marketplace experience has made it clear that there is a significant population that was underserved in previous years, and it is this population that Sendero is positioned to best serve.  Our goal is to keep serving that population in the best way possible.

One of the accomplishments we receive the most praise for is our public health program.  In recent years we have been able to successfully design and implement a program that increased HPV vaccinations by over 33 percent among 10- to 13-year-olds.  Other improvements in care include increasing breast cancer screening by 10 percent, including prompting the early detection of at least three cases that members say would have otherwise gone undiscovered, and increasing flu vaccinations by 25 percent for young adults. Sendero continues to work on many of the latest issues that have made headlines, including opioid abuse and hepatitis C.  These are the kinds of common challenges against which we have been able to make significant headway while most carriers are still finding their way.

What is the state of health care in Texas like right now?

It is apparent that health care is valued by residents at a much higher level than it is valued by politics.  Hopefully these two valuations will move closer together over the next few years, which would be in everyone’s best interests.

What is your advice to political and policy leaders in health care?

Watch and listen to what your constituents are saying and doing for their healthcare.  This is a critical issue for the future of both personal and governmental budgets, and there are plenty of constructive conversations to be had going forward.